During 2017, Von Co

question 78

Multiple Choice

During 2017, Von Co.sold inventory to its wholly-owned subsidiary, Lord Co.The inventory cost $30,000 and was sold to Lord for $44,000.For consolidation reporting purposes, when is the $14,000 intra-entity gross profit recognized?

• A) When goods are transferred to a third party by Lord.
• B) When Lord pays Von for the goods.
• C) When Von sold the goods to Lord.
• D) When Lord receives the goods.
• E) No gain can be recognized since the transfer was between related parties.

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